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By lowering its share of the market to less than 50 percent, Slim's company America Movil will avoid regulations that apply only to very large companies.
Ronaldo Schemidt/AFP/Getty Images

Carlos Slim to break up telecom giant amid regulatory crackdown

Move aims to avoid new restrictions placed on monopolies operating in Mexico

July 9, 20142:37PM ET

Mexican telecommunications company America Movil plans to divest assets as quickly as possible to escape tougher regulation, and it hopes to sell to a single buyer, spokesman Arturo Elias said on Wednesday.

The company, controlled by billionaire Carlos Slim, announced on Tuesday that it was ready to sell assets to cut its market share in Mexican telecoms and avoid regulations that apply only to very large companies.

Under the constitutional changes, passed more than a year ago, the Federal Telecommunications Institute in March declared America Movil "dominant," with more than 50 percent of the market, and imposed a number of restrictions aimed at diminishing its power.

With the selloff, the company expects to no longer be considered "dominant" and can avoid measures that would require it to share infrastructure with competitors, adjust rates or eliminate fees for telephone calls inside the country.

Those new rules are part of a telecommunications sector overhaul approved by Congress in an attempt to curb the power of America Movil and broadcaster Televisa.

America Movil will have to sell 15 to 17 percent of its share in telephony to weigh in below the 50 percent threshold and still have margin to grow, Elias said.

Speculation has already begun to swirl over who might buy the assets, but Elias offered little insight.

"It would have to be someone who comes to Mexico to really invest in telecommunications, to create a true, tough competitor," he said, but added that the winner would not necessarily be foreign.

Elias, who is Slim's son-in-law, said the company expected to offer voice, data and video services to clients in Mexico. At present, it is barred from offering pay television in Mexico, but Elias said it planned to do so as quickly as possible.

Early on Wednesday, Congress gave final approval to secondary laws laying out the fine print of the telecom sector overhaul. The legislation will now head to President Enrique Peña Nieto's desk to be signed into law.